Tyson Foods 2012 Annual Report Download - page 3

Download and view the complete annual report

Please find page 3 of the 2012 Tyson Foods annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 91

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91

3
PART I
ITEM 1. BUSINESS
GENERAL
Founded in 1935, Tyson Foods, Inc. and its subsidiaries (collectively, “Company,” “we,” “us” or “our”) are one of the world’s largest
meat protein companies and the second-largest food production company in the Fortune 500 with one of the most recognized brand
names in the food industry. We produce, distribute and market chicken, beef, pork, prepared foods and related allied products. Our
operations are conducted in four segments: Chicken, Beef, Pork and Prepared Foods. Some of the key factors influencing our business
are customer demand for our products; the ability to maintain and grow relationships with customers and introduce new and
innovative products to the marketplace; accessibility of international markets; market prices for our products; the cost of live cattle
and hogs, raw materials, grain and feed ingredients; and operating efficiencies of our facilities.
We operate a fully vertically integrated poultry production process. Our integrated operations consist of breeding stock, contract
growers, feed production, processing, further-processing, marketing and transportation of chicken and related allied products,
including animal and pet food ingredients. Through our wholly-owned subsidiary, Cobb-Vantress, Inc. (Cobb), we are one of the
leading poultry breeding stock suppliers in the world. Investing in breeding stock research and development allows us to breed into
our flocks the characteristics found to be most desirable.
We also process live fed cattle and hogs and fabricate dressed beef and pork carcasses into primal and sub-primal meat cuts, case
ready beef and pork and fully-cooked meats. In addition, we derive value from allied products such as hides and variety meats sold to
further processors and others.
We produce a wide range of fresh, value-added, frozen and refrigerated food products. Our products are marketed and sold primarily
by our sales staff to grocery retailers, grocery wholesalers, meat distributors, warehouse club stores, military commissaries, industrial
food processing companies, chain restaurants or their distributors, international export companies and domestic distributors who serve
restaurants, foodservice operations such as plant and school cafeterias, convenience stores, hospitals and other vendors. Additionally,
sales to the military and a portion of sales to international markets are made through independent brokers and trading companies.
We have a 50/50 joint venture with Syntroleum Corporation, called Dynamic Fuels LLC (Dynamic Fuels), which produces renewable
synthetic fuels. Construction of production facilities was completed in late fiscal 2010, and initial production began in October 2010.
FINANCIAL INFORMATION OF SEGMENTS
We operate in four segments: Chicken, Beef, Pork and Prepared Foods. The contribution of each segment to net sales and operating
income (loss), and the identifiable assets attributable to each segment, are set forth in Note 16: Segment Reporting of the Notes to
Consolidated Financial Statements.
DESCRIPTION OF SEGMENTS
Chicken: Chicken operations include breeding and raising chickens, as well as processing live chickens into fresh, frozen and value-
added chicken products and logistics operations to move products through the supply chain. Products are marketed domestically to
food retailers, foodservice distributors, restaurant operators, hotel chains and noncommercial foodservice establishments such as
schools, healthcare facilities, the military and other food processors, as well as to international markets. It also includes sales from
allied products and our chicken breeding stock subsidiary.
Beef: Beef operations include processing live fed cattle and fabricating dressed beef carcasses into primal and sub-primal meat cuts
and case-ready products. This segment also includes sales from allied products such as hides and variety meats, as well as logistics
operations to move products through the supply chain. Products are marketed domestically to food retailers, foodservice distributors,
restaurant operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and
other food processors, as well as to international markets.
Pork: Pork operations include processing live market hogs and fabricating pork carcasses into primal and sub-primal cuts and case-
ready products. This segment also includes our live swine group, related allied product processing activities and logistics operations to
move products through the supply chain. Products are marketed domestically to food retailers, foodservice distributors, restaurant
operators, hotel chains and noncommercial foodservice establishments such as schools, healthcare facilities, the military and other
food processors, as well as to international markets.